Scottish banknotes are unusual, first because they are issued by retail banks, not central banks, and second, because they are technically not legal tender anywhere in the United Kingdom – not even in Scotland.[1][2] As such, they are classified as promissory notes, and the law requires that the issuing banks hold a sum of Bank of England banknotes or gold equivalent to the total value of notes issued.[3][4]

The fact that the notes are defined as legal currency means[clarification needed] they are not withdrawn from circulation in the same way as the Bank of England notes cease to be legal tender on a given date. Instead the Scottish banks withdraw old notes from circulation as they are banked. Any notes still in circulation continue to be honoured by banks,[5] but retailers may refuse to accept older notes.[6]

All Bank of Scotland notes bear a portrait of Sir Walter Scott on the front in commemoration of his 1826 Malachi Malagrowther campaign for Scottish banks to retain the right to issue their own notes. [7] The Bank of Scotland's 2007 series of banknotes is known as the Bridges of Scotland series. These notes were introduced on 17 September 2007, and show Scotland's most famous bridges on the reverse side. From 2016, the Bridges of Scotland series is being renewed with the issue of new polymer notes with designs that follow the same basic theme of "bridges". The Tercentenary and 2007 series of notes are being withdrawn from circulation and replaced with the polymer series as these are issued, but older notes continue to be accepted at banks. In line with this, the Committee of Scottish Bankers encouraged the public to spend or exchange non-polymer five and ten pound notes before 1 March 2018.[6]

A Bank of Scotland £20 note of the 2007 issue

Following the announcement that HBOS (Bank of Scotland's parent company) would be taken over by Lloyds TSB in September 2008, it was confirmed that the new banking company would continue to print bank notes under the Bank of Scotland name.[8] According to the Bank Notes (Scotland) Act 1845, the bank could have lost its note-issuing rights, but by retaining headquarters within Scotland, banknote issue continued.[9]

As of August 2017, the Royal Bank of Scotland is in the process of adopting a new series of banknotes. These will be made of polymer. Two (the £5 and £10 notes) have already been released, whilst a new £20 note is being designed. The £5 note shows Nan Shepherd on the obverse accompanied by a quote from her book 'The Living Mountain', and the Cairngorms in the background. The reverse displays two mackerel, with an excerpt from the poem ‘The Choice’ by Sorley MacLean.[10] The obverse of the £10 note shows Mary Somerville, with a quote from her work 'The Connection of the Physical Sciences', and Burntisland beach in the background. The reverse displays two otters and an excerpt from the poem ‘Moorings’ by Norman MacCaig.[11] The obverse of the £20 note, to be introduced in 2020, will show Catherine Cranston. [12]

A polymer £10 note featuring Mary Somerville

The previous series of Royal Bank of Scotland notes, originally issued in 1987, remains in circulation, although it is now in the process of being replaced by polymer notes: the Committee of Scottish Bankers encouraged the public to spend or exchange non-polymer five and ten pound notes before 1 March 2018.[6]. On the front of each note is a picture of Lord Ilay (1682–1761), the first governor of the bank, based on a portrait painted in 1744 by the Edinburgh artist Allan Ramsay.[13] The front of the notes also features an engraving of the bank's former headquarters in St Andrew Square, Edinburgh. The background graphic on both sides of the notes is a radial star design which is based on the ornate ceiling of the banking hall in the old headquarters building.[14] On the back of the notes are images of Scottish castles, with a different castle for each denomination.

Clydesdale Bank has three series of banknotes in circulation at present. The most recent set of notes, the Polymer series, came into circulation in March 2015, when the Clydesdale Bank became the first bank in Great Britain to issue polymer banknotes. The £5 commemorative notes, issued to mark the 125th anniversary of the construction of the Forth Bridge, contain several new security features including a reflective graphic printed over a transparent "window" in the banknote.[15][16] Further notes in the polymer series will be introduced over time, replacing the previous paper notes: the public are being encouraged to spend or exchange non-polymer five and ten pound notes before 1 March 2018.[6]

The polymer notes continue the theme of the World Heritage Series of paper banknotes, introduced in autumn 2009. The new notes each depict a different notable Scot on the front and on the reverse bear an illustration of one of Scotland's UNESCO World Heritage Sites.[17]

A £20 note of the Clydesdale Bank Famous Scots Series

Banknotes of the earlier Famous Scots Series portray notable Scottish historical people along with items and locations associated with them.[18]